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Slovakian parliament rejects plan to enhance eurozone rescue fund

The Slovakian parliament on Tuesday rejected a proposal to boost the firepower of the €440bn ($599bn) European Financial Stability Facility, effectively blocking a revamp of the eurozone's rescue fund and prompting a collapse of the country's centre-right coalition government.

Out of 124 lawmakers present in the Slovakian parliament to discuss the motion, a mere 55 endorsed the plan, while 60 abstained and nine voted against it, making the country the only member of the 17-nation eurozone not to ratify the proposal.

Prime Minister Iveta Radicova said she would attempt to secure the opposition’s backing for getting the measure approved in a fresh vote, but refused to set a fixed date for the same.

Meanwhile, auditors from the troika of the European Union, European Central Bank and International Monetary Fund have told Greece that it will get its next tranche of €8bn in rescue aid “probably in early November".

Concluding their review of Athens’ finances, the group of international inspectors noted that the embattled nation was unlikely to attain its fiscal target for this year - "partly” due to a further decline in economic output, as well as because of slippages in the implementation” of the agreed austerity programme.

However, the auditors said that George Papandreou's socialist administration was on course to attain its 2012 deficit target of €14.9bn.

Separately, the European Banking Authority is said to be weighing a minimum capital buffer of as much as 10% for the region’s lenders to ensure that they can sustain large-scale markdowns on their exposure to sovereign debt of troubled eurozone nations.

On the other hand, outgoing ECB president Jean-Claude Trichet on Tuesday warned the European Parliament that the continent’s debt crisis had reached “systemic” proportions and called for the situation to “be tackled decisively” without “further delays”.

Speaking in his capacity as chairman of the European Systemic Risk Board, Trichet argued that the EFSF should be tapped urgently to help recapitalise the region’s banks.